What exactly is a spread, and what is the necessity for its existence?
The spread, also known as the bid/ask spread, represents the variance between the bid and ask prices found on a trading platform. It serves as a gauge of market liquidity and equates to transaction expenses.
What does the term "forex" refer to?
Forex, also known as FX, short for foreign exchange, represents a global decentralized market where currency trading occurs. Currencies are traded in pairs such as EURUSD and USDJPY, with exchange rates determined by the buying and selling of one currency for another.
The forex market stands as the largest and most liquid financial market globally, boasting the highest daily trading volume. While banks and institutions constitute a significant portion of the market, retail traders can engage in speculation on currency price movements, aiming to generate profits.
When trading forex through an online broker, you're not trading the underlying asset itself. Instead, you're forecasting price fluctuations in the currency pair you're trading.
The forex market stands as the largest and most liquid financial market globally, boasting the highest daily trading volume. While banks and institutions constitute a significant portion of the market, retail traders can engage in speculation on currency price movements, aiming to generate profits.
When trading forex through an online broker, you're not trading the underlying asset itself. Instead, you're forecasting price fluctuations in the currency pair you're trading.
What does the term "spread" signify?
The spread represents the variance between the bid and ask prices featured on a trading platform, also commonly known as the bid/ask spread. Spreads serve as a metric for assessing market liquidity and correlate with transaction costs.
What do "bid" and "ask" refer to?
The bid and ask prices are prominently featured on online trading platforms. The bid represents the highest price a buyer is prepared to pay for an instrument, whereas the ask (also referred to as the offer) signifies the lowest price a seller is willing to accept for one.
When purchasing an instrument, attention is directed towards the ask price. Conversely, when selling, consideration is given to the bid price.
When purchasing an instrument, attention is directed towards the ask price. Conversely, when selling, consideration is given to the bid price.
What does the term "slippage" mean?
Slippage occurs when your order is filled at a price that differs from the one requested. It can be either positive or negative, resulting in your order being executed at a more advantageous or less favourable price, respectively.
Market prices can swiftly fluctuate, particularly during periods of heightened volatility such as economic data releases. Slippage is more prone to happen during these times due to delays in processing and executing your order.
Utilizing limit orders is one approach to safeguarding your trades against slippage.
Market prices can swiftly fluctuate, particularly during periods of heightened volatility such as economic data releases. Slippage is more prone to happen during these times due to delays in processing and executing your order.
Utilizing limit orders is one approach to safeguarding your trades against slippage.
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